Then vs. Now: Argentina
Back in June 2009, I wrote in Tatler magazine about Argentina’s economic struggles. At the time, inflation was out of control, the peso was weakening, and trust in the government was eroding. Businesses faced endless red tape and investors were wary. Yet, walking through Buenos Aires, you wouldn’t have guessed the country was in crisis. The city was alive with energy, with its people pushing forward like they always do, finding ways to adapt no matter how tough the circumstances.
Fast forward to today, Argentina is undergoing one of the most dramatic economic transformations in its history under President Javier Milel. And for the first time in a long time, there is genuine optimism that Argentina might finally break free from its cycle of crisis and stagnation.
Milei came into office promising to dismantle the economic model that had held Argentina back for decades. And in many ways, that’s exactly what he’s doing. His government has slashed public spending by 30%, fired tens of thousands of government workers, and started bulldozing the regulatory maze that made doing business in Argentina notoriously difficult. Inflation, which had hit a staggering 300% in April 2023, has now dropped dramatically, with analysts expecting it to settle at 25.9% by the end of 2025. At the same time, the economy is projected to grow by 4.5% this year.
But while Milei’s economic shock therapy has delivered impressive short-term results, there are still major hurdles to overcome. The biggest concern among investors is capital controls. While the government has cut through much of the bureaucratic red tape, investors need to know that if they put their money into Argentina, they can take it out when they need to. Until those restrictions are lifted, foreign capital will remain cautious. Another issue is the exchange rate. The peso remains overvalued, making exports less competitive and making it harder for the central bank to accumulate much-needed dollar reserves.
Despite these challenges, Argentina is now one of the most interesting markets in the world. Energy is a particularly promising sector, with deregulation and the opening of shale formations making Argentina a key player in global energy markets. Financial services are also attracting investment, thanks to tax incentives and regulatory reforms. And as inflation stabilizes, the retail sector is expected to pick up as consumer spending rebounds.
Argentina had seen this cycle before — crisis followed by recovery, only to slip back again. But today, there are real signs of change. Inflation, once out of control, is finally slowing. The stock market has surged, reflecting renewed investor interest. And while challenges remain, the country is moving in a direction that, for once, feels different.
Fifteen years ago, I left Argentina wondering if it would ever escape its economic rollercoaster. Today, I’m starting to believe that maybe — just maybe — this time, the country is on the right path.
Here is the original Tatler article published in June 2009:
Malas Aires
With its worst drought in 50 years and a crippled stock market, the economic prognosis for Argentina is far from bright, writes Mark Mobius
Argentina is probably one of the most fascinating countries in the world, with rich farmland, lakes, mountains, southern glaciers, and the elegant Buenos Aires, known for its great restaurants, educated and cultured people, and, of course, the tango. Spaniards founded the city in 1536, and it still maintains a European aura. It’s a cultural mix shaped by waves of immigrants from Italy, Spain, England, Germany, and other European countries.
The first thing that struck me upon arrival was that the airport no longer had the tatty look it had on my previous visits. Now under private management, it features sleek duty-free shops and a modern arrival and departure area.
We stayed at the new Hilton Hotel on the Puerto Madero waterfront. Puerto Madero has a fascinating history. From the start, Buenos Aires struggled to accommodate large cargo ships, as the shallow river prevented direct docking. Ships remained far from the shore, unloading passengers and merchandise onto barges and ferries for transport to the pier. In 1882, the government contracted Eduardo Madero, a local businessman, to take charge of a new port to solve the problem. It was an engineering landmark at the time. Over ten years, a canal was dredged, and port facilities were built, complete with tall steel cranes that are still preserved as a testament to the area’s history.
To accommodate even larger ships, a new port was completed in 1926, rendering the Madero docks obsolete. The cranes and old warehouses fell into decay until the 1990s, when redevelopment transformed the area. The first phase involved converting the old brick warehouses into modern offices, apartments, lofts, and restaurants. Then, new high- and low-rise buildings were constructed by renowned architects such as Norman Foster, César Pelli (of Kuala Lumpur’s Petronas Towers fame), and Philippe Starck. The area has now become one of the city’s trendiest places to live, work, and enjoy.
As we drove to our first appointment in the city, we passed the Casa Rosada, the president’s palace, which faces a grand square where numerous demonstrations have taken place over the years.
By March of this year, Argentina’s stock market had declined by 72% from its peak in June 2008. It rebounded by 16% in April, but the economic outlook remains grim due to a poor political and economic environment. Economic activity is slowing rapidly, reflecting weak international markets, deteriorating confidence, and declining real income.
Argentina is an agricultural country, but it is experiencing its worst drought in more than 50 years. Government income is being hit by the economic slowdown, the downward trend in global agricultural prices, and reduced export revenues. Despite this, government spending continues to rise, driven by the upcoming elections.
The current occupant of the Casa Rosada is Cristina Fernández de Kirchner, wife of former president Néstor Kirchner. She took office in December 2007 after a contentious election, winning 45% of the vote—one of the widest margins since democracy returned in 1983. However, the legality of her campaign funding was disputed when U.S. federal prosecutors alleged that Venezuelan president Hugo Chávez secretly tried to funnel nearly one million dollars to her campaign.
Of Spanish and German descent, Fernández de Kirchner is known for her combative speech style, drawing comparisons with Eva Perón. Upon taking office, she faced numerous challenges inherited from her husband, including inflation, union demands for higher salaries, defaulted foreign debt with the Paris Club, and low credibility. Many believe inflation statistics are falsified—after Néstor Kirchner’s then Minister of Economy, Felisa Miceli, removed an official from the National Institute of Statistics and Census in charge of inflation indexes and hand-picked a replacement. While the government claimed inflation declined by 7% in January, private estimates put it at 20%.
Néstor Kirchner served as president from 2003 to 2007 and initially won with just 22% of the vote in the first round, after his opponent, former president Carlos Menem, withdrew from the race (though Kirchner was leading in the opinion polls at that stage). Kirchner had been a member of the left-wing radical Peronist Youth organization, which opposed military dictatorships and stood against powerful military and police elements.
To be fair to Kirchner, he inherited a dire economic situation. His predecessor had abolished the fixed exchange rate regime, which had pegged the Argentine peso at one U.S. dollar since 1991. Once the regime was lifted, the peso quickly devalued by more than two-thirds. Today, one U.S. dollar is worth 3.7 pesos.
Nevertheless, there was still an air of economic hope in Buenos Aires, and we look forward to seeing proof of that recovery on our next trip.